Short answer
Futures trading means buying or selling a standardised contract to exchange an asset at a future date. Nasdaq futures (NQ and MNQ) settle in cash against the Nasdaq-100 index, trade nearly 23 hours a day on CME Globex, and are priced per index point rather than per share.
What a futures contract actually is
A futures contract is a standardised agreement, guaranteed by an exchange clearing house, to buy or sell something at a set price on a set date. The standardisation is the point: everyone trades identical contracts, so the order book is deep and you can exit whenever you like without negotiating terms.
Index futures never deliver anything. There is no warehouse of Nasdaq stocks — the contract settles in cash against the index level, so profit and loss is just the difference between your entry and exit multiplied by the contract multiplier.
The vocabulary you need, and nothing more
- — Multiplier — the dollars per index point. NQ is $20 per point; MNQ is $2.
- — Tick — the smallest price increment. On NQ and MNQ it is 0.25 index points.
- — Tick value — what one tick is worth: $5.00 on NQ, $0.50 on MNQ.
- — Margin — the deposit the broker requires to hold a position, not the cost of the contract. Intraday margin is usually far smaller than overnight margin.
- — Leverage — the consequence of margin: a small deposit controls a large notional value, which magnifies both directions.
- — Expiry and rollover — index futures expire quarterly (March, June, September, December). Traders roll to the next contract in the days before expiry.
- — Long and short — you can sell first and buy back later just as easily as the reverse. There is no borrow to arrange.
Nasdaq futures contract specs
| NQ (E-mini) | MNQ (Micro E-mini) | |
|---|---|---|
| Underlying | Nasdaq-100 index | Nasdaq-100 index |
| Multiplier | $20 × index | $2 × index |
| Tick size / value | 0.25 pt / $5.00 | 0.25 pt / $0.50 |
| 10-point move | $200 | $20 |
| Settlement | Cash | Cash |
| Expiry cycle | Quarterly (Mar/Jun/Sep/Dec) | Quarterly (Mar/Jun/Sep/Dec) |
| Session | Sun 18:00 – Fri 17:00 ET, 1-hour daily break | Same |
Why traders choose futures over stocks or CFDs
- — One market to master instead of five thousand tickers.
- — Nearly 23-hour access, so your session fits your time zone.
- — Symmetrical shorting with no borrow, no uptick friction.
- — Central clearing and transparent, exchange-published contract terms.
- — Deep liquidity: your stop is filled where you asked, most of the time.
Where beginners lose money
Almost never on strategy. The classic sequence is: trade the full-size NQ instead of MNQ, size by account balance instead of by stop distance, hold through a data release, and average down. Any one of those can erase a month; together they end an account inside a week.
Fix it structurally. Decide the dollar risk per trade first — a fixed fraction such as 0.5% of the account — then derive position size from your stop distance, then find a setup whose stop fits. Never the other way round.
A sane learning path
- — Week 1 — learn the contract: ticks, session times, how the platform's order types behave.
- — Weeks 2–4 — replay historical sessions bar-by-bar and take simulated trades in one window only, such as the New York AM killzone.
- — Weeks 5–8 — build a written model and collect 50 replay trades, logging entry, stop, target and R multiple every time.
- — Then, and only then — trade one MNQ live with real risk, expecting the psychology to be the hard part.
Leverage is not the risk. Position size chosen after the entry is the risk.
Practise before you fund
Historical replay is the cheapest simulator that exists: real Nasdaq futures data, real spreads in the structure, no money at stake. Step through past sessions, place simulated market, limit and stop orders, and let the journal compute your expectancy for you.